City Desk Morning Briefing - Monday December 19, 2011

All the latest and must-have information around the key business and economic
issues of the day.

I don’t like Mondays sang the Boomtown Rats. It’s certainly not going to be a great one for beleaguered shareholders in HMV.

The troubled retailer has published first half results – and they are not pretty. The group lost £51m in the first half as like-for-like sales fell 11.6pc. The retailer has warned that "trading circumstances create material uncertainties which may cast significant doubt on the Group's ability to continue as a going concern in the future".

We have also got an update this morning from Ocado, which has warned of "continued capacity constraints" at its distribution centre.

The death of North Korean leader Kim Jong II has spooked Asian markets. South Korea is the hardest hit, not surprisingly, closing down 3pc this morning.

We'll have our debt crisis live blog up and running for the opening of European markets, which are forecast to follow Asia and open lower. The FTSE 100 is expected to open 54 points lower.

European finance ministers hold a conference call later to approve the draft text of the new eurozone "fiscal compact" and consider the size of countries individual loans to the International Monetary Fund. As we report this morning David Cameron is coming under pressure today to resist demands to contribute more than £25bn.

In his first interview since becoming president of the European Central Bank, Mario Draghi has breached a taboo and warned in the Financial Timesthis morning of the costs of a eurozone break-up.

Away from Europe the main focus on the economics front will be on the publication in the US of the National Association of Home Builders sentiment index. Having risen steadily since June economists expect the index to hold steady at 20.

QUOTE OF THE DAY

"The cause of all this high street misery is a many-headed monster. Clearly, if there is a cold snap this year too then the Grinch may well steal Christmas 2011 as the bad weather keeps shoppers away."

- Douglas McWilliams, chief executive of the Centre for Economics and Business Research, on its prediction that retail sales will be lower in December compared with last month and a year earlier.

FIGURE OF THE DAY

1.5m - The number of homeowners who would have to get a second job, work longer hours or dip into savings if interest rates were to rise by just one percentage point, according to Bank of England research.

BEST OF THE SUNDAY PAPERS

The Sunday Telegraph: Leading economists have warned the Government that implement the Independent Commission on Banking's controversial plans proposals to split retail and investment banking will damage the UK's economic growth.

The Sunday Times: Blacks Leisure faces a desperate scramble for survival this week as City sources revealed plans for a post-Christmas administration and break-up, putting 2,000 jobs at risk.

The Independent on Sunday: Exxon Mobil is understood to have sounded out London-listed Gulf Keystone Petroleum over a possible deal that could value the Kurdistan-focused group at around £7bn.

The Mail on Sunday: Hundreds of thousands of family-owned small firms, already reeling from 'succession' problems and struggling with red tape, are about to be hit by a tax raid.

THE EQUITY MARKETS

Japan: The Nikkei started the week on a down note closing 1.3pc lower at 8,296.12, having fallen as low as 8,272.

US: The Dow Jones Industrial Average closed down 2.42 points on Friday at 11,866.39. Over the week, the benchmark index fell 2.7pc. The S&P 500 closed up 3.91 points, but was down 2.9pc over the week.

UK: The FTSE 100 closed down 13.5 points at 5387.34 on Friday, to record a 2.6pc loss on a week. The FTSE 250 closed down 24.11 points at 9803.17.

COMMODITIES

Gold suffered yet another weekly fall as it lost $123 or 7.7pc to close at$1,591. Brent crude oil lost $4.87 over the week, or 4.5pc, to $103.75 per barrel. For all the latest on the commodities markets, log on here.

THE MONEY MARKETS

The pound closed modestly down against the euro on Friday, falling 0.06 cents to €1.1902. The pound rose against the dollar , closing up 0.52 cents at $1.5529. For the latest on currency, log on here.

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